Motorola's got a new mobile-payments system it's going to push in the US, but like most mobile payments systems that have come before it, it's hard to see this one succeeding. The system, called M-Wallet, will launch first as a software-only solution that allows only certain transactions like online bill pay and funds transfers. But the company says in six to nine months, "a special chip for the phone" will be available and consumers will be able to make purchases at retailers that get the proper point-of-sale equipment. Motorola hopes to get carriers on board by setting things up so they can charge users for the service -- which may be the most significant hurdle. There's got to be enough user benefit to offer people value for the cost of the service, and swiping a phone instead of a credit or debit card doesn't seem like that much of an improvement. The service will also fail if Motorola can't get retailers to buy in -- and, as others have found, that means they're going to have to help pay for retailers' POS equipment. Many mobile payment systems try to attract retailers by offering lower payment-processing fees than existing payment methods. But since Motorola's system will apparently use credit cards and bank accounts, it's hard to see where any discount will come in. And why should Motorola get into the payment-processing business? It should be thinking about creating a platform for contactless IC, not just an application. Let payment companies create payment applications for it, and let other people build non-payment applications that take advantage of the technology. That's what Motorola's role should be here -- providing the best possible platform. Not jumping into the payment-processing business.
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